SU 12 Evidence - Purchases, Inventory, Payroll

Question 1

What is the preferable procedure for PP&E?

Answer 1

Testing the details of transactions

Question 2

What procedures would be performed to obtain evidence about fixed asset additions?

Answer 2

Inspecting documents and physically examining assets

Question 3

Which test of details would help an auditor determine that AP was misstated?

Answer 3

Examining vendor statements for amounts NOT reported as purchase.

Question 4

When auditing a public warehouse, what procedure is most important in determining unrecorded liabilities

Answer 4

Inspection of receiving and issuing procedures

Question 5

To check the accuracy of hours worked an auditor would compare clock cards to

Answer 5

Shop job TIME TICKETS

Question 6

What is a risk factor in auditing the purchasing department?

Answer 6

Purchases are made from parties related to buyers or other company officials

Question 7

When RMM is assessed low this means that

Answer 7

Controls are in place and operating effectively

Substantive tests can be reduced to only analytical procedures

Question 8

Auditors will perform substantive TESTS of DETAILS when:

Answer 8

Control risk is high
The RMM is high in the account
Analytical procedure may result in an UNUSUAL result

Question 9

Net sales takes into account sales and

Answer 9

Returns and allowances

Collectibility is IRRELEVANT

Question 10

When can test counts be made at interim periods?

Answer 10

If the entity uses the perpetual method and records are WELL KEPT

Question 11

To test RIGHTS and OBLIGATIONS related to INVENTORY, an auditor should

Answer 11

VOUCH recorded purchases to DOCUMENTATION

Question 12

What are the accounts included in an audit plan for noncurrent debt?

Answer 12

Bonds payable, mortgages payable, notes payable and related INTEREST EXPENSE

Question 13

Which assertion is being tested when the auditor test the equipment balance by evaluating large debits recorded in repairs and maintenance to determine whether any should have been capitalized?

Answer 13

COMPLETENESS

Question 14

When analytical procedures reveal significant variations, the auditor should

Answer 14

Perform substantive TESTS of DETAILS to investigate the accounts

Question 15

In order to detect a lapping scheme involving customer checks received in the mail, an auditor would

Answer 15

Compare the dates the checks are DEPOSITED per the bank statement with the dates the remittance credits are recorded

Question 16

When RMM is assessed low for assertions related to payroll, substantive tests would be limited to analytical procedures and

Answer 16

Recalculating payroll accruals